Comments Requested on Newly Named Version of XML for Business Reporting

The first specification for a business-reporting
variant (XBRL) of extensible markup language (XML) was the subject of
an April symposium. The XBRL project committee held the meeting to
encourage comments on the specification and to announce its new name.
Until then, it had been known as XFRML—for financial reporting. (See
Highlights, JofA, Apr.00, page 6.)

Committee representatives said XBRL will enable issuers and users of
business information to share it more accurately and conveniently
through various electronic applications and media, including the
Internet, where an increasing number of companies are disclosing
financial information.

Prepared under the leadership of the AICPA, the initial
specification pertains to the financial information of only commercial
and industrial companies reporting according to U.S. GAAP. Specialists
in other industries and national reporting standards are preparing
further specifications that the committee expects to issue over the
next 18 to 24 months. XBRL conforms with accepted accounting practices
and standards and does not require reporting companies to disclose
additional financial information.

XBRL uses XML-based “tags” to describe data elements contained in
public and private companies’ financial statements. These descriptive
attributes make it easier to assemble information in a way that
facilitates reissuance in a wide variety of formats (for example,
printed financial statements, HTML documents for a company’s Web site,
EDGAR documents filed with the SEC and customized credit reports or
loan documents), without data re-entry or other time-consuming manual
processes. Consequently, companies will find it cheaper to prepare and
distribute their financial statements, and investors and analysts will
have easier access to reliable information they need to make informed
investment decisions. For example, XBRL will make it easier to
automate comparisons of financial information, accounting policies,
notes to financial statements between companies and other items that
today are processed manually.

The XBRL project committee consists of representatives from more
than 30 organizations, including the Big Five accounting firms, the
IASC, software makers Oracle and Microsoft and financial services
provider Morgan Stanley Dean Witter.

At the symposium, AICPA Chairman Robert K. Elliott said that a
reported 25% of the $1 trillion spent annually in the United States on
medical care is wasted. XBRL, he said, can help the financial sector
focus on cost-saving opportunities of the same magnitude. He added
that XBRL implementation costs will be minimal for CPA firms and their
clients because the specification will be “built into” software and
operating procedures.

But Elliott reserved much of his enthusiasm for the project’s other
possibilities. “XBRL’s greatest benefit will be in terms of [the
financial sector’s] improved ability to create additional value. By
reducing information asymmetry,” he said, referring to inappropriate
combinations of financial data elements that appear synonymous but
aren’t, “we can improve liquidity between suppliers and users of
capital and facilitate movement of capital to the new economy.”

Mike Willis, a partner of PricewaterhouseCoopers and chairman of the
committee, urged symposium attendees and the financial community in
general to submit comments on XBRL’s conceptual structure, or
“taxonomy”—a list of data elements the committee selected as the most
relevant and most commonly required under U.S. GAAP.

Later, in an interview, Willis told the JofA that XBRL
works effectively with other XML-based financial specifications, such
as Open Financial Exchange (OFX), which enables financial
institutions, businesses and consumers to communicate financial
information to each other over the Internet. “OFX describes individual
transactions and XBRL reports summaries of them—a highly complementary
relationship,” he said.

The conceptual structure also specifies each element’s relationship
to others. For example, “current assets” and “assets” are data
elements—the former “rolls up” into the latter. The draft version
contains more than 1,100 such items, arranged in a hierarchy, that
pertain only to commercial and industrial enterprises.

The meticulous detail of XBRL’s structure is essential to ensuring
the clarity and accuracy of information, in accordance with existing
reporting standards, as it shuttles between the often dissimilar
software applications companies, lenders, investors, auditors and
regulators use.

The present version of XBRL is in English, but the committee plans
to issue future releases in other languages—for example, French and
Spanish, in which a significant portion of the world’s financial
reporting appears.

Ultimately, XBRL will benefit a wide range of stakeholders—the
reporting companies, accountants, regulators, analysts, investment
advisers, capital markets and lenders, as well as software developers
and data aggregators. Committee representatives said XBRL is designed
to balance the needs of these groups, ensuring its convenience and
usefulness for each of them.

Since the conceptual structure is expected to expand and change in
the coming months, the committee advised interested parties to stay
abreast of new developments by registering at the XBRL Web site, www.xbrl.org , where the committee
now is accepting comments on the draft version until June 5, 2000. It
expects to publish a final version of the release by the end of July.

TAX NEWS

President Barack Obama signed legislation that retroactively extended more than 50 expired tax provisions for 2014, allowing taxpayers to take advantage of a host of tax incentives during this filing season.

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